One in Eight Australian Restaurants Closed in a Year as Margins Hit 2.5%
An ABC long-read investigation spent 48 hours inside a Sydney independent restaurant revealing that one in eight Australian eateries shut between mid-2025 and mid-2026 as profit margins collapsed to just 2.5 percent.
A deep-dive feature published by ABC News on October 25, 2026 spent 48 hours inside Claret Club, a Sydney independent restaurant run by co-owners Bridget Raffal and Harry Hunter, to examine the collapse gripping Australia's hospitality sector. According to credit data firm CreditorWatch, one in eight restaurants and cafes closed in Australia between July 2025 and July 2026, nearly double the closure rate of other sectors. Average restaurant profit margins have fallen from around 10 percent a generation ago to just 2.5 percent by the end of 2025, according to John Hart, national president of Restaurant and Catering Australia. Owners cite a convergence of pressures: rising wages, persistent inflation, cost-of-living squeezes that reduce how often customers dine out, and new policies that force restaurants to absorb card bank fees. The food delivery industry — including platforms such as Uber Eats and DoorDash — is worth 1.8 billion dollars according to IbisWorld data, competing directly with independent venues for dining occasions. Over the two days of reporting, Bridget and Harry dealt with a broken heat lamp, a leaking roof and borrowed equipment from neighbouring businesses — a snapshot of the relentless grind facing independent operators, and of the close-knit street community that keeps them going.
